Essay on black money in indian economy
The government must take action against the corrupt officials who in many ways contribute to the growth of black money.
People must understand the importance of paying the tax and should refrain from concentrating black money. Despite these arguments, one has to say that the accumulation of black money is a poor reflection on our society.
These sectors need systematic reforms. Illegal commissions: Many government officials take illegal commissions from the general public for offering certain services. National security is threatened because black money is used to finance criminal activities.
When tax rates approach per cent, tax revenues approach zero, because higher is the incentive for tax evasion and greater the propensity to generate black money.
Crores of rupees collected as tax, could have been used for public welfare schemes- building schools, colleges, hospitals and roads etc.
Analysis of black money in indian economy
The report finds that punitive taxes create an economic environment where economic agents are not left with any incentive to produce. Other way which is used is in air travel, real estate, jewellery etc. This has resulted in non-fulfillment of physical targets on every project, diversion of resources meant for target groups to non-entity sectors and generation of huge black income in the economy. The share of direct taxes in GDP has also increased from 2. Lower taxes and simpler compliance process reduces black money, suggests the white paper. Under report of production figure. Another cause of black money, the report finds is the high transaction costs associated with compliance with the law. Modified currency notes[ edit ] Government printing of such legal currency notes of highest denomination i. While this is set for the benefit of the people it is often misused to accumulate black money. See, how much they have as a black money, and spending that money either for their personal growth or in unofficial purposes. After reading this essay you will learn about: 1. High tax rate would only make people look for ways for tax evasion.
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